Climate Goals Hold Firm on Investor Agendas Amid Global Turmoil
Trade tension and geopolitical strife have shifted Canada’s policy priorities away from climate change, but major investors say they remain focused on preparing companies for a transition to a low-carbon economy.
Prime Minister Mark Carney touts the country’s natural resource bounty, including oil and natural gas, as key to strengthening the national economy in the face of a U.S. trade offensive.
The rationale: By boosting exports through tens of billions of dollars of new pipelines and LNG terminals, Canada could become a supplier of choice as previously reliable trade routes, such as the Strait of Hormuz, are rendered too dangerous and threaten global energy security.
All of this spending, accompanied by Ottawa deprioritizing climate-related policies, suggests a slower pace on the road to net zero. Behind the scenes, though, institutional investors want proof that the country’s largest companies are still striving to lower their greenhouse gas emissions and adapt to more severe weather, including heat waves, wildfires and floods.
A report grading large Canadian emitters on sustainability performance, published Thursday by investor-led coalition Climate Engagement Canada (CEC), shows that accounting for climate risks is top of mind for asset managers and owners such as pension funds and insurers. Results for the 39 companies the group tracks are mixed.
Large investors are doing their fiduciary duty by keeping companies focused on climate-related risks and adaptation to both policy and the physical impacts, said Barb Zvan, chief executive officer of University Pension Plan Ontario and chair of the CEC steering committee.
“We’re the ones with the long-term horizon. We’re the ones that ultimately will own the risk of this in the holding of the assets,” Ms. Zvan said in an interview. As a result, institutions are keeping climate concerns front and centre, she said.
CEC’s 67 members are anything but environmental pressure groups. They represent some of biggest names in finance, collectively managing $16.8-trillion in assets. The group’s focus list of companies includes those in oil and gas, utilities, mining, transport and consumer goods, as well as food, agriculture and other industrials.
This is the fourth annual benchmarking report grading 10 metrics, such as target setting, capital allocation, governance, scenario planning and financial disclosure. All are based on public reporting.
The results show more companies are directing capital to climate objectives and setting medium-term emission reduction goals, but fewer are disclosing their long-term targets. Fifteen companies on the list now report long-term greenhouse-gas reduction goals, down from 19 in 2023.
Twenty-six companies report plans for a low-carbon transition, up from just 16 in 2023. The number of companies that provide analysis of various climate scenarios has nearly doubled to 23 from 12.
At least some of the slippage in long-term reporting stems from a legal chill after the federal government passed anti-greenwashing legislation in 2024, prompting numerous companies to remove environmental messaging from public disclosures, said Delaney Greig, vice-chair of the CEC technical committee.
Among those graded, fuel retailer Superior Plus Corp. scored improvements in a number of indicators, including short- and medium-term targets and decarbonization. Lundin Mining Corp. improved its scores in decarbonization and public policy engagement. Electricity distributor Emera Inc.’s scores declined in several areas, such as short-term targets, decarbonization and capital allocation, according to the study.
In a separate report scheduled for release next week, Royal Bank of Canada’s Climate Action Institute said its climate action barometer – a gauge that measures policy, capital, industry action, consumer activity, technology and emissions – fell for the second year in a row.
It attributed the decline to federal and provincial policy shifts toward major project development, increased natural gas for power generation domestically and export abroad, and reduced emphasis on carbon pricing.
Capital aimed at decarbonization has been flat at $20-billion to $25-billion annually since 2022, well short of the estimated $60-billion a year required for Canada to get to net zero by 2050, according to RBC.
However, the notion that emissions reduction costs are onerous to companies appears to be outdated, the bank’s report said. In a survey of 150 executives, just 11 per cent reported cost increases of more than 15 per cent from implementing sustainability measures. Most classified such expenses as modest or manageable.’
This article was first reported by The Globe and Mail
